In the Winner Take All Cage Match Between Music And The Net Are You Helping the Wrong Side Win?

By Moses Avalon

PROLOGUE: In March of 2007 EMI, facing serious strategic challenges, became the first Major label to issue DRM-free (no copy-protection) downloads on iTunes. To facilitate this, Apple’s CEO broke his promise to maintain uniform pricing of 99 cents: DRM-free will cost about 30% more than other sales. Response from the other three competing Major labels was shock and disappointment. Will they be forced to also do DRM-free to compete?

Two weeks later, the U.S. Copyright Office decided that Major labels will be allowed to charge higher rates to webcasters for streaming music. Response from Tech Companies was shock and disappointment. Will they have to pay labels more to provide the public with a radio service they don’t even charge for?

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What would the perfect music business look like?

Would it be one where distribution is a given to anyone who thinks they have talent? Or do you think there should be some form of filter because Joe Average doesn’t have time to sift through millions of MySpace pages? A filter is what we have had with the Major label system since the 1960’s. It’s one many trying to squeeze through its bottleneck resent. Now, technology is putting that system to the test by giving artists and consumers new choices. But is the price for choice too high? Is it at the expense of an entire industry that has supported tens of thousands for over seven decades and produced some of the greatest music ever recorded?

Although creators of commercial music are artists, it is because of sequencers and samplers they are compelled to become, to some degree, “techies” as well. And since technology has aided pop music production, many of us think they have complementary agendas. The reality is that the tech world and pop music are at war and these two super-powers are vying not only for control of music distribution but also for the loyalty pop music’s creators. One side is trying to make a complete fool out of them.

THE PREYED UPON AND THE PREYED

In one corner we have the “Tech-Masters,” as I call them: computer/gadget makers and internet service providers. They use pop music as a loss-leader to attract new consumers. They may be music fans, but they resent record companies the same way we resent paying the monopolistic electric company for a necessity we can’t even touch.

In the other corner, the four major record/publishing companies. To support the huge bets they place on artists, they need to protect their inventory– copyrights.

To Tech-Masters, music copyrights are an inconvenience; a road–block to their master plan—selling gadgets and internet services to everyone and their grandmothers. If they cannot rely upon record companies to license them music cheap, their logical alternative is to avoid paying for it at all by challenging copyright law, BUT… only as it applies to art—not their software. It’s a delicate trick but one to which they have committed undisclosed millions. If we let them, they will eventually turn pop music into the free toy at the bottom of their proverbial cereal box.

And here’s the scary part; the Tech-Masters are getting you, music’s creators, to help them.

IN DRM WE TRUST

The recent Tech-Master campaign is “DRM-free music” which is tech-talk for downloads that have no copy protection encryption. DRM is a software mojo that prevents or limits the copying of a song-file. Consumers love the idea of DRM-free because it means they can wax record company and distribute many copies of your work at will while only paying for it once. Is it good for the music business?

Tech-Masters think so. They want record companies to stop whining about P2P piracy and license their catalogs without this stingy, confining DRM thingy. They try to persuade the Majors with arguments like “If people can make copies, they’ll buy more music. Remember cassettes in the late 1970s?”

Labels don’t agree. Back then, people could not make 100s of copies with a mouse click. Tech-Masters retort, “But CDs have no copy-protection, what’s the dif?” Labels sigh and shake their heads, “First off, the only reason we don’t have copy protection on CDs is due to complex technical issues and second, CDs cost us about 60 cents and we sell them for about $10. Downloads have a narrow margin and invite theft via illegal P2P.”

So, if gentle persuasion isn’t working what’s the Tech-Master’s next step? It seems to be shaming the Majors via a winning of the public’s hearts & minds: dehumanize the enemy; make the public think record companies are too dumb & greedy to see the “logical” path for the future. Eventually, they hope, Majors will cave. The plan is working.

The vast majority of music business stories in the press are negative. They focus almost exclusively on the RIAA’s litigation and label firings. Why don’t we hear about the good side? The tech industry grosses about $85 billion a year, eclipsing the music business with its $15 billion. While the Tech industry spends tens of millions in advertising with the mainstream press, ask yourself when was the last time you saw a big add spread for a new album release. Advertising revenue influences editors more than anything else. That’s not conspiracy paranoia. It’s a fact.

But the “objective” press (deliberately or not) ignores the bigger issues at stake for artists if labels falter:

If the Tech world loses this campaign, they will simply have to pay a bit more for their loss leader item. Since they tend to bundle music with other products this expense will not be felt in any significant way by the consumer. It will just shave the tech industry’s gross a tiny bit to about $87 billion.

But if art loses this war, that is to say, if record companies/artists lose their ability to control who gets to license their work and at what price, the music business, as we know it, ends. Music itself will suffer as an art form and the Tech-Masters will absorb the labels, bundle their catalogs, and in a few years you’ll buy a lap-top and it will come pre-loaded with an entire Juke Box of Classic Rock, Rap, Jazz, whatever.

This may sound great if you’re a consumer, but if you’re a music company you will make only a small licensing fee and your artists and songwriters will see a paltry fraction of this sum. The trickle down effect for studio owners, producers, lawyers, managers, etc, will naturally be devastation.

As a music professional, if you’re not pissed off, you’re not paying attention.

Fortunately it’s not too late to stop this insanity.

JOINING THE COLLECTIVE

A truly successful Orwellian “hearts & minds” campaign means also turning YOU, the very person who relies on copyrights to earn a living, into someone who thinks that technology’s need to progress should be senior to author’s rights. This too is a tough trick but the Tech-Masters are succeeding. How? Because we love to bash our own industry! It’s cathartic. We just love to opine about the “dying record biz.” The momentum has caught many of us. I read this recently in a chat room, “I can’t see it being anything but good if the top four record companies went out of business. The whole industry needs a fresh start.” Many on the page agreed.

These “pro music” websites who celebrate negative views on the Majors are not friends to anyone who makes a living with music. (One example that has me puzzled is Downhill Battle. They purport to be doing artist advocacy while simultaneously insisting that you never buy Major label music. The site is owned by software developers. Many of these sites peddle a covert pro-tech agenda with half-truths about the music biz. The most recent one is yet another attempt to make us feel that resistance is useless: income from declining CD sales is NOT being offset from digital sales. Sounds bleak. Even a poorly researched and very tech-biased article in the Wall Street Journal agreed. So it must be true.

But it’s not.

Tech-Masters don’t want you to know that according to the annual reports of Universal, Sony and Warner, in 2006 the music biz had one of its best years ever, revenue wise. Or that sales from the mobile space and other new licensing sources has and will continue to put billions of new revenue into our space. They don’t want you to know this because it would deflate their argument for DRM-free.

Instead, they focus journalists on how Majors are dial-up dumb, lazy and hurting artists by price-gouging internet radio stations out of existence (more on this next month). They highlight the hollow statistics of bad first quarter CD sales. (Which are always low. It’s just after Christmas duh!)

They are hoping journalist don’t ask the fiscally logical question: in the face of a recession, where automobile and many other industries are showing sales slumps, plus a radically changing technology landscape and all the negative publicity, Majors are still showing respectable numbers. So just how dumb are they? Who cares if sales of CDs are back to 1992 levels? That was still a very profitable time for music and anyone who says that companies like Sony and Universal cannot survive a shift in sales paradigms is either lying, misinformed, brainwashed, selling a book, or a sour-grapes ex-record executive caught in the downsizing that this changing landscape requires.

My personal favorite Tech-Master sophistry is, “Illegal P2P file sharing hurts (tech owned) music subscription services too. It drives up our cost and we also have to compete with free.” This is true Machiavellian genius; compete with free for a service that is a loss-leader to them in the first place? How dumb do they think we are?

Reality: it’s because of techies that illegal P2P exists in the first place and if illegal P2P prevails, record companies will be forced to issue DRM-free music to compete. Which brings us to poor, almost defeated EMI and their decision to take the advice of Tech-Master, Steve Jobs.

Steve is the classic Tech-Master. According to his annual report, he does NOT make any significant money off of music sales–iTunes is a break-even division for Apple. Like all Tech-Masters he uses iTunes as a loss leader to promote the sale of his cash cow-product– iPods. He could care less if Majors make a profit.

If EMI’s DRM-free move catches on, the other Major’s will eventually be forced to do the same. If Jobs turns out to be right and sales go up, up, up—great, I’ll personally issue a mea culpa. But if he’s wrong, the Majors will not be able to re-cork the Genie. Their catalogs will be permanently devalued and they will eventually be forced to sell out on the cheap. On that day, you can bet, Tech-Masters will be waiting with their checkbooks.

SO WHAT? WHO NEEDS THE MAJORS? LET THEM DIE!

Nice fantasy. Sometimes I share it. And in terms of karma there might be some justice there as well. But then I wake up and realize something: The benefits would not outweigh the utter financial chaos it would cause to Indie artists.

Major Labels are the “banks” of our industry. They loan money to 1000’s of artists, who then spend it in 1000’s of studios and with 1000’s of producers, who hire 1000’s of engineers, who buy gear and invest in new artists, who sign with labels, and so on.

Even if you’re an independent or emerging artist, you are in the wake of this economy. Big artists draw people into music outlets/venues and thus expose them to new music. Also, the big spending by Majors pushes down the off-peak rates on studio time, materials, and CD replication. It also creates the upside potential to justify investment in emerging artists.

The fantasy that “if Majors die a Phoenix will rise from the ashes” is very unlikely. The higher probability is that in order for there to be a viable music industry at all Majors need to stay in business.

WHO SHOULD YOU BELIEVE?

So called experts and analysts who applaud EMI’s “wisdom” and curse the RIAA’s defense of copyrights are just sucking up to the Tech-Masters who give them a media platform. Then disgruntled music executives grant interviews and ignorantly agree just to relieve their angst. This bandwagon effect is helping Tech-Masters load the gun they have pointed to our heads.

Think people! Have you ever heard a technology spokesperson agree with labels or argue in favor of copy protection? NEVER! They argue for DRM-free music to make a more “consumer friendly experience.” They are arguing that the consumers’ rights are senior to the artists’. Let me repeat that: they are arguing that the way consumers buy music is MORE IMPORTANT than the rights of the people who create it.

As creators (or their advocates/vendors) one would think we would refuse to help and insist on arguing with anyone who tries to convince us that unprotected music is better for the music business or that because the law requires Tech-Masters like AOL, Yahoo or Microsoft to cow-tow to a group that you also find repellent –the Majors–that Tech-Masters are somehow the “victims” in all this. That is asinine.

The enemy wants your work for free. To seduce you, they offer gadgets. To convince you to abandon faith in your industry, they peddle hopelessness. It’s as simple as that. Don’t give in. Because, if you think the bottleneck was tough when you had to deal with only four Major record companies, imagine what it will be like under three or four Tech companies, run by people who value silicone over a melody!

It’s time we started thinking like artists again. Not computers, or computer makers.

This is winner take all. Should choosing sides really be that difficult?

Moses Avalon

For examples of what I’m talking about and the thread that inspired this piece:

I loved this article. I have known many artists who have been content to give their music away, somehow thinking they are being artisticly noble or something. I think they are mostly people who don’t have anything to offer that people will pay for. Quality artist deserve to be paid fairly for their music. The more the public like their music, the more they deserve to make. DRM-free music means that artists will no longer be able to afford to make quality music and to everyone loses. End of discussion.

This article was written to persuade the audience to think that the Majors are good and the Tech-Master is bad. The truth is they are both bad. There is no positive outcome for the artists. Many artists do not waste their time with Majors any more unless the artist is in a rush to sign anything for fame. Many artist know the best way to get your material heard and create a fan base is to do it yourself. This way you can keep your own material and creativity. The internet has help thousands of artists including myself to sell their work without the hassle of a Major. I personally would never sign with a major as an artist. I have many friends who gave me information that they never received before signing to a Majors. The Majors fear this because if you succeed they have to come chasing you and the price will not be cheap. As an artist I am concern about making great music and the able to continue to be creative. My music reaching millions of people is a plus not a requirement. All artist are not fame seekers, many artist actually do it for the art. The reason why people are falling for anything that the media give them about the Majors is because the Majors is known for taking artist material and doing the same thing that Tech-Master is trying to do now, the difference is Tech-Master is upfront about it. The sad thing about this is most artists don’t care because if the Majors folds, it will give thousands of artists a fresh start. This tells you what you are dealing with when you talk to artists on Major labels and the say “what happens-happens”. Moses I follow your blogs and this article was a letdown for me. The Majors have treated artist unfair for so long, majority of the artist do not care enough to rally for the Majors unless you are a Super Star and depend on the Majors for everything. Moses you and I know that smart artists can make millions without the Majors. Yes, it will take hard work but the payoff is even better. Moses I am going to have to say…I don’t agree. Smart artist will be okay, if you know the business. The artist you are talking about depend or the Majors for everything. Another artist told me to read this…he was so upset because he thought you was down for artists and now he sees who side you are on.

[This article was written to persuade the audience to think that the Majors are good and the Tech-Master is bad.]

This article is designed to create balance because when I wrote it (years ago) there was zero coverage about Tech-Master agendas in regard to the music space and labels were being lambasted as the bad guy. Now, many bloggers and newspapers have followed my lead on this angle.

Neither is good or bad, but if I had to qualify one over the other, I would centrally chose labels. They steal from recording artists, but the Tech-Masters in this piece, are stealing from artists (all types), writers, labels and publishers. Which means, since artists are the beacon of truth in our civilization, ultimately they are stealing from everyone. So, I guess that makes them worse. One need only read what Google is up to, or FaceBook to see that the tech world has little regard for constitutional interpretations, like privacy. That makes them far worse than a record label, morally, in this regard.

[Many artists do not waste their time with Majors any more unless the artist is in a rush to sign anything for fame. Many artist know the best way to get your material heard and create a fan base is to do it yourself.]

When you use the word “many” what do you mean? The aggregate of ALL 2 million band fan pages on Facebook? Well, then yes, “many” artists do no “waste their time” with” majors. Because they are also not “wasting time” trying to make a serious six-figure living with their music either.

But if you are speaking of artists who are making enough with their music to feed families, then you are sadly mistaken. “Many” artists, in fact the vast majority, do have deals on labels and are quite proud of them. The rest of the “many” you refer to would probably sell their grandmothers if a major offed them $1,000,000 for a multi album deal.

[The internet has help thousands of artists including myself to sell their work without the hassle of a Major.]

You could always do that, even before the internet. But you can not sell in bulk, pre or post internet, without a label or big-ass sponsor, for simple financial and logistical reasons that still exist today, even a decade into the Internet age.

[The reason why people are falling for anything that the media give them about the Majors is because the Majors is known for taking artist material and doing the same thing that Tech-Master is trying to do now, the difference is Tech-Master is upfront about it.]

Only God can guess at what you mean by “same thing.” But I presume you mean exploiting masters. If by that you mean the Tech-Masters are “up front,” you’re officially a Tech Troll. Majors give money in exchange for rights. We can argue that they might not pay enough, but at least they pay something. Tech-Masters in the early 2000s, gave zero. They took what they wanted and broke the law to do it. They acted as criminals. Only after tens of millions in new legislation and advocacy efforts (like mine BTW) have they come to the table to offer things like “three-strikes” programs. We are still waiting for the big licensing deals the ISPs owe the labels for all the millions of dollars they helped others to steel from the thousands of artists who starved while ISPs grew rich, turning a blind eye to the Fatwa on copyrights.

[The Majors have treated artist unfair for so long, majority of the artist do not care enough to rally for the Majors unless you are a Super Star and depend on the Majors for everything.]

True, but irrelevant. Tech-Masters are manipulating this negativity artists feel towards the majors to get artists to join an agenda that will ultimately hurt them. You don’t see that and that is a mistake.

[The sad thing about this is most artists don’t care because if the Majors folds, it will give thousands of artists a fresh start.]

You are an antiracist, not a reformer. You’re the kind of misinformed person who thinks that if his bank failed it’s cool because he wouldn’t have to pay his mortgage, meanwhile the country’s economy goes in the crapper. Without infrastructure there is no civilization. And without major labels there is no music business.

[Moses I follow your blogs and this article was a letdown for me.]

You cant be following my blogs very well because this article is years old. Furthermore so much has happened since I wrote the Manifesto that supports my correctness that it has me wondering if you follow anything, including industry news. EMI has crumbled– as predicted in this Manifesto. Other things predicted here have also come to pass. But, hey, you disagree with me. Cool. Let’s hear some of your predictions. World is flat? Sun revolves around the Earth? Start your own blog and see how well you can forecast.

But no matter, the feeling of disappointment you feel towards me is mutual. I pride myself on having smart readers. It’s sad to learn that one of them is such a misinformed tech-tool. And this is not about your disagreeing with me. I love dissent. It’s because your reasoning is rooted only in your self-centered observations, and virtually no actual research. You have drank the tech-master Kool-Aid and are lost to me. I really hope for your sake that you are like, 17 or something. If so, I apologize for addressing you harshly. You’l grow up someday and read what you wrote on my blog and say, Moses was right. I was as such a naive kid.

[Moses you and I know that smart artists can make millions without the Majors.]

I have no idea what you know, since you decided to post anonymously. But I would ask you to name several US artists who have “made millions” on record sales without a major invalid in any aspects of their career. I wish you could. If it were true, I’d have a different opinion about everything in the Manifesto. And someday it might be true. But not today. Not yet. And I live in the present. And the clients who depend on my advice live there with me. In the present, not some ideological future often proposed by teenage techies.

Unfortunately, I don’t know anyone (save one or two exceptions whose models are not repeatable by others) who’s been able to consistently pull in a seven-figure income without a major involved intimately. And if I don’t know one, then my guess is, neither do you. So, when you write “I know that smart artists can make millions without the Majors,” you probably don’t really don’t know any such person.

[Yes, it will take hard work but the payoff is even better. Moses I am going to have to say…I don’t agree. Smart artist will be okay, if you know the business. The artist you are talking about depend or the Majors for everything. Another artist told me to read this…he was so upset because he thought you was down for artists and now he sees who side you are on.]

I want artists to make millions. To do that you need a sponsor, at last at first. That sponsor can be a major label or your granddad. I don’t care who it is, but someone has to step up and bankroll a career, and so far the majors are the ONLY ones doing that in a consistent way. Even in this crapy economy. (with a few rare exceptions.) Banks wont, parents can’t. Who’s gonna do it. You?

I don’t say, “screw the labels.”

I say, “screw the labels… but use protection.”

Get their money without giving up your rights. That’s the challenge I want for my readers, not to refuse to accept a logical path for success just because it is with someone who is “out to get you. ” That’s paranoid and stupid.

What’s really clear is what side you are on, my friend. It’s a side that will someday turn on you and you’re going to feel betrayed. On that day you will return to this page and you will be sobbing at the realty you are no-doubt rejecting as you read this.

In concussion i leave you with a lesson:

There are three types of people in this world:

1) people who make things happen
2) people who watch things happen and
3) people who wonder… what the hell happened?

Right now, you are the third kind. But it’s not too late to change. Wake up and join the cause. Be on the side of the angels when you do. Join the artists. Not the Tech-Masters. We have better parties and hotter chicks. And there is a good reason for that. God likes music. That’s why its been around for so long.

So, help out your friend who turned you on to this piece, by helping all the artists. Otherwise, just go re-insert yourself back into the Matrix. The rest of us who can see the truth have work to do.

There is no “TechMasters” common front that profits out of the imminent collapse of the copiright industry. Apple might make more profit from non-DRM music, but they are taking a huge loss when jailbroken iPhones circumvent the AppStore, just as Microsoft does when 70% of Windows copies in development countries are pirated .

Calling most of the bullshit the music industry spews these days “art” is a stretch also. Copyright ensures you can make money, so piracy hits into the revenue of commercial, mass-produced counterfeit culture. A positive development, IMHO.

The users don’t want to pay for the act of making a copy. The whole internet is a huge copy machine, you click and a copy is made from the server’s hard drive to your own. You can no longer request money for making copies. This is not a moral issue, a legal issue or an economical issue that must be ‘tackled’, this is how it is, welcome to the future. Users don’t give a crap about your puny DRM, they will always have the option of free and they will not let you break the internet to ban free.

To survive in this brave new world you need to morph your intellectual product so that you get paid before releasing the first copy, or proportional to the self-distribution of the work (which you have no control over). Concert tickets, product placement, fan donation/pledge, wealthy patrons or government grants are some examples of revenue sources in a world without copyright. Adapt or die.

“they are arguing that the way consumers buy music is MORE IMPORTANT than the rights of the people who create it.”

Yes because its true.

Either you do music witout aiming to earn you do it because you love it and then it does not matter.

Or you want to sell and earn money and the of course its about how you can get my money.

That is the way it works in the rest of the society and I get so tired of you” We are so special so we should have special laws and rights”

If I produce something and someone else can produce it cheaper then it sucks but hey its a reality. I get payed for what I do once but musichians want to get payed all their life and sure I understand the diffrence but still just as sportstars and such.

Either you are good and will survive or you are not that good and you will have to choose either continue out of fun or retire because ppl don´t want your stuff.

[…] several lucid chapters Levine explains and elaborates the issues I introduced in my 2005 piece, The DRM Manifesto, with far more astonishing detail than i ever could. More of this sentiment was recently touched […]

An interesting piece, but it completely bypasses the main arguments against TPM/DRM:
1. It gives a new and complete power to the TPM providers, such as Apple and Amazon. How’s that working out for you so far?
2. It just doesn’t work! It never has, and by definition it cannot. A TPM simply cannot prevent copyright infringement.

Desperate industry calling for desperate measures. The monetary value placed on virtual property actually becomes an issue of infringement on the party declaring that there is no ‘price’ on the property created. Ultimately it boils down to basic rights. Interesting read:)